Hourly Break-Even Calculator
Calculate the minimum hourly rate you need to cover all expenses
Professional Disclaimer: This calculator provides general estimates only. For valuable items or complex situations, always consult a qualified financial advisor.
Tip: Include all business and personal expenses that your hourly rate needs to cover.
Personal Income Requirements
Annual Business Expenses
Work Schedule
Advanced Options
Break-Even Analysis
Total Annual Costs:
Total Billable Hours:
Break-Even Hourly Rate:
$91,000.00
1,440 hours
$63.19
Pricing Recommendation:
Your actual hourly rate should be 20-50% higher than your break-even rate to account for profit, unexpected expenses, and business growth.
Efficiency Tips:
- Increase billable hours by 10% → New rate: $57.44 (-9.1%)
- Reduce expenses by 15% → New rate: $53.71 (-15.0%)
- Combine both strategies → New rate: $48.85 (-22.7%)
Understanding Your Break-Even Rate
Why It Matters
Your break-even rate is the absolute minimum you can charge without losing money. It accounts for all business expenses, taxes, and your personal income needs. Charging below this rate means you're subsidizing your clients.
Key Variables
The three main factors affecting your rate are: 1) Your income requirements, 2) Business expenses, and 3) Billable hours. Small changes in billable hours have the largest impact on your required rate.
"Freelancers who calculate their break-even rate earn 28% more on average than those who guess their rates, according to a Freelancers Union survey."
Industry-Specific Benchmarks
| Profession | Typical Range | Billable Hours |
|---|---|---|
| Freelance Writer | $35-$150/hr | 25-35/week |
| Web Developer | $50-$200/hr | 20-30/week |
| Graphic Designer | $45-$150/hr | 25-30/week |
| Business Consultant | $75-$300/hr | 15-25/week |
Pro Tip: Your location, experience level, and niche specialization can significantly impact where you fall within these ranges. Don't undervalue specialized expertise.
Frequently Asked Questions
Should I include health insurance in my expenses?
Yes, absolutely. If you're paying for your own health insurance as a freelancer or small business owner, include it in your business expenses. This is a real cost that your hourly rate needs to cover.
How do I estimate my billable hours accurately?
Track your time for 2-4 weeks to get realistic numbers. Most independent professionals bill only 50-70% of their working hours, with the rest spent on admin, marketing, and professional development.
What's the difference between break-even rate and market rate?
Your break-even rate is your financial floor, while market rate is what clients are willing to pay. Ideally, your market rate should be significantly higher than your break-even rate to allow for profit and growth.
How often should I recalculate my break-even rate?
Review it quarterly or whenever your expenses, income needs, or work patterns change significantly. Many freelancers recalculate at the start of each year before setting new rates.
What if my break-even rate is higher than market rates?
Consider: 1) Reducing expenses, 2) Increasing billable hours through efficiency, 3) Adding higher-value services, or 4) Targeting better-paying clients. Never work permanently below your break-even rate.